Macrophage-induced inflammation is a key contributor to the development of type 2 diabetes and insulin resistance. Palmitate, a saturated fatty acid whose concentration is elevated in patients with type 2 diabetes, can promote macrophage inflammation and is an important factor for the development of type 2 diabetes. Nevertheless, the molecular mechanisms mediating palmitate-induced macrophage activation remain incompletely understood. Here we propose to test a novel hypothesis that changes in protein lysine fatty acylation, which is caused by increased free fatty acids, constitute an important mechanism for obesity-induced type 2 diabetes. We recently showed that palmitate can be internalization and used by cells for lysine (Lys) fatty acylation. We discovered that Lys fatty acylation is an abundant protein modification and identified human SIRT6 as the first robust enzyme to remove fatty acyl groups (such as myristoyl and palmitoyl groups) from protein Lys residues. SIRT6 is a member of class III Lys deacetylases (HDACs), or sirtuin (SIRT1-7), which are known to play an important role in obesity and type 2 diabetes. Our discovery of the efficient defatty-acylation activity of SIRT6 thus challenges a long-standing concept in the HDAC biology that classifies the enzymes as deacetylases. Based on these findings, we hypothesize that Lys fatty acylation and its reversal by SIRT6, at least in part, regulates the metabolic activation of macrophages. In this proposal, we will test this hypothesis by identifying the Lys fatty acylation substrates, in histones and non-histone proteins, and studying their biological functions in both fibroblast and macrophage cells. These studies will reveal key molecule players of Lys fatty acylation pathway in a model system (fibroblast cells) that has been widely used for studying fundamental biology. Our studies will also elucidate the mechanism by which Lys fatty acylation regulates the metabolic activation of macrophages, a cellular system that is physiologically relevant with inflammation, obesity, and diabetes. The knowledge gained from this study will likely have a broad impact on our understanding of histone deacetylases and will lay a foundation for studying Lys fatty acylation, a largely uncharacterized protein modification pathway. The mechanistic understanding of fatty acid-induced metabolic activation of macrophages will help to devise new treatment or preventative strategies for type 2 diabetes and other metabolic diseases.